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Cyprus Possessions Roar Trimmings as Vulnerable Grind Scares Absent UK Buyers - Bloomberg

Cyprus Possessions Roar Trimmings as Cowardly Grind Scares Absent UK Buyers - Bloomberg Buyers Email | Print |A A A By Simon Packard Feb. His company, Leptos Estates, is struggling to sell vacationhomes on the Mediterranean island to British buyers after thepound lost almost a quarter of its value against the euro andU.K. Two thousand miles away, Cyprus is feeling the aftershocksof the end of a British housing binge. Prices for apartments inthe resort towns of Paphos and Paralimni fell as much as 25percent in the past four months, after more than doubling since2002, according to data compiled by broker Antonis Loizou &Associates Ltd. Building permits for homes on theisland, a gauge of future housing starts, declined 2.4 percentduring the first 11 months of last year. Parador was the U.K.’s second-largest broker of second homes in countries including Cyprus. Britons are pulling out of second-home markets after thedeepest recession since the 1980s cut U.K. The economy shrank 1.5percent in the fourth quarter from the previous three months asthe financial crisis led to a collapse in consumer spending andinvestment. Bad News Aristo, the biggest homebuilder in Cyprus, reported a 41percent decline in sales during the first 10 months of 2008 asdemand from U.K. At Leptos’s sales office in north London, dozens ofcustomers planning for retirement were unable to sell their homesto finance a move to Cyprus, and investors seeking a holiday homeor rental property have similar problems, Cartwright said. As aresult, Leptos has reduced prices and slowed its developmentprogram, he said. Since last year, purchases of assets ranging from villas inSpain to ski chalets in Bulgaria have almost ground to a halt. The pound’s slide has stretched the finances of most Britishowners, particularly those with overseas mortgages. ForeignCurrency Direct Plc, which handled money transfers for 30,000property transactions outside the U.K., said the number ofBritish customers repatriating money rose by as much as 31percent in the 12 months through January. In the past five years,the British accounted for about 10 percent of new-home sales onthe island and two-thirds of all foreign purchases, according tothree brokers on the island. That’s proportionately higher thanfor larger holiday-home markets, like Spain or France. Turkish Occupation Most investment went into the southern part of the islandcontrolled by the Greek-Cypriot government. Northern Cyprus hasbeen occupied by Turkey since 1974. In the build-up to Cyprus’saccession to the European Union in 2004, “people were fightingover properties,” Cartwright said. Cyprus property prices have doubled since 2004, including a19 percent increase in 2007, according an index compiled by theMAP S. Platis consulting firm in Cyprus, based on valuationssupplied by brokers at BuySell Cyprus Real Estate. In Paphos, billboards for villas or holiday apartments linethe highway from the airport to the town center. Many are namedafter Aphrodite, the Greek goddess of love and beauty, whosemythical birthplace is a short drive away along the coast. About 80 percent of new homes built in the area were snappedup by the British at the height of the investment boom, saidAntonis Loizou, senior partner of the broker of the same name. Taxi Drivers “We didn’t get the guys with the yachts, we got the taxidrivers and fish-and-chip shop owners,” Loizou said in aninterview. The legacy is “an oversupply of cheaply built, identikitapartments” that are a turn-off to buyers, said Farrell, who isbuilding two holiday-rental developments near Limassol. Cyprus’s economy will grow 1.1 percent this year, less thana third of last year’s pace, the European Commission estimates. Central bank governor Athanasios Orphanides said Jan. Dire Forecasts Construction and real estate accounted for about 29 percentof the country’s 15.6 billion-euro economy in 2007 and theindustries employ one in 10 Cypriots, government statistics show. The Federation of Building Contractors Associations ofCyprus, or OSEOK, told its members last year to brace for“significant performance decreases.” Now, as projects getcanceled and contractors struggle to get paid, “more problemswill arise,” OSEOK said. Cartwright is now seeking clients at trade shows andexhibitions in the Middle East, where Cyprus has previously founda source of investment. Leptos also has offices in Moscow, sincethe island has traditionally acted as a gateway for Russianinvestment overseas. Сватба